YOUR MONEY

Bernanke meows

Yesterday, the US Federal Reserve finally did what it has promised to do since mid-summer – some 6 months ago: start tapering its $85 billion dollar monthly buyback program.

It did so with a just over 10% reduction.

How did the markets react?    A spectacular change in the Dow Jones of 292 points; but all going UP, UP, UP – to just 8 points below the all time stock market record.

Analysts seem confused by this outcome as logic would have markets start to recede as almost free money for speculation is winding down.

Yes, $75 billion dollars is still being added to feed the gravy train this month.

And even if the same, approximately 10% cut were done each month – it would take a year before the ‘tapering’ and extra cash would be removed from the speculative stock market and derivative plays.

The ‘cut’, put simply, was too little to alter the speculative games.

In fact, speculators now know they have at least a year to ‘play’ with government subsidized, taxpayer cash.

And Bernanke’s comments that this ‘tapering’ would only go on if the economy stayed strong, all but guaranteed Wall Street and international speculators  that their money ‘bets’ – with almost free Bernanke dollars – are protected.

 

Well done Mr. Bernanke.

You are not a tiger, but a paper tiger.

You don’t roar, just meow.